Productivity's Fine Line

You and your employees have been working very hard, and getting a tremendous amount of work done. You probably didn’t take August off. Perhaps you even worked on Labor Day, and saw the irony in that.

I haven’t been tapping into your payroll records. But I have been paying attention to two sets of statistics: productivity and unemployment.

The U.N.’s International Labour Organization reported in September that the United States beat Europe and Japan in the productivity game last year. The average output per American worker was $60,728 in 2002. The output of the average worker in the European Union was $43,034. That’s what happens when people take August off.

Part of what drives that productivity is the fact that Americans work longer hours than Europeans. U.S. workers averaged 1,815 hours in 2002, compared to a range of 1,300 to 1,800 hours for E.U. workers. The Japanese, who have cited enough cases of people working themselves to death that they have a word for it--karoshi--put in no more hours than workers here did.

So Americans are working very hard indeed. But that’s mostly because we have no choice. In order to stay afloat, many companies have had to cut costs, and that means cutting head count. In one week last month, 3Com Corp. cut 1,000 jobs, International Paper Co. slashed its payroll by 3,000, and Levi Strauss & Co. announced that it would shed 650 employees.

Workers who still have jobs work all the harder, fearing they’ll be next, says Shelly Wolff, a productivity specialist in Watson Wyatt Worldwide’s Stamford, Connecticut, office. Longer hours and the fear of layoffs aren’t the only things that account for high productivity, of course. Technology has made it possible for each of us to get more work done, Wolff says.

Take the online brokerage Ameritrade, which announced last month that it had passed the 3 million-account mark. Because most of those account-holders handle their trades via the Web or through an automated phone system, the workforce is very lean: a mere 1,800 employees, says the company’s CAO, Kurt Halvorson.

"One of the tenets of our success is leveraged technology," Halvorson says. "We can add transaction volume with very little incremental spending on technology and staff. It is not a linear relationship."

Productivity can have its dark side, of course. "You get to a point of diminishing return, where people put in too much time and then lose productivity," Wolff says. Where that line lies "is hard to tease out of the data," she says. It can show up as an increased use of sick days, as people seek a way to get some paid time off without looking like slackers, she says. It’s possible, of course, that they really are sick. A few weeks--or months--of 12-hour days and six-day weeks can do that.

Some economists say hiring will pick up by the end of the year, and exhausted workers will get a break. Maybe there is a technology option that could further streamline business, so companies don’t have to demand more hours from tapped-out employees. But if the economy doesn’t pick up, and if you’re not another Ameritrade, what then? The next move in the productivity game will have to be something other than longer hours worked by fewer people. Karoshi is nothing to be proud of.